In the last four years, the Nairobi Stock Exchange and independent equity funds that are managed by private financial management companies have had an unprecedented surge. But with this upsurge, questions have begun to be asked about the companies that are listed on the Stock Exchange. At the moment, there is no independent source of information that investors can consult to gauge the ethical or social record of these companies or of those intending to be listed in the future.

Allavida is currently conducting research into the views of private investors and fund managers on ethical investment, and their likely response to the launch of ethical funds in Kenya. The objective is twofold: first, to encourage fund managers to enable investors wishing to develop socially responsible investment portfolios to do so; second, to work with the various governing bodies in the financial sector to create an Ethical Investment Index that will help investors to make informed decisions on companies in which they would like to invest.

The response from investors has been encouraging, with a large number airing their frustration at being locked into funds that go against their personal values. While this is true of both large- and small-scale investors, allowing investors below a certain threshold to create their own portfolios is not cost-effective for fund managers. As matters stand, therefore, only the bigger investors have the option to build their own portfolios.

However, it’s clear that having a reference point in the form of an Ethical Investment Index would enable potential investors to make an all-round assessment of the investments they are offered and to exert some pressure on public listed companies whose conduct of their business does not match their ethical and social criteria as investors.

For more information
Contact Linda Ihuthia at lihuthia@allavida.or.ke